All Forum Posts by: Tamara Deering

Stainless steel appliances are hard to keep clean, it shows every finger print it also scratches and are a bit more expensive than white appliances.  The same is true for brushed nickel fixtures, chrome is timeless.  Moen is a good brand but you need a special tool to remove the cartridges if the shower fails, Delta or Price Pfister may be better choices for that reason alone. I think from a desirability stand point a pedestal sink in a mistake, at least in the main bathrooms.  People need places to put their stuff so unless you are installing medicine cabinets, shelving and linen closets a pedestal sink is a drawback. Also, if you are truly in a pre-1950's building you may want to consider solid wood cabinets painted white.  Natural wood cabinets weren't commonly used until mid-century so the look may be discordant, especially if you have wide craftsman trim and doors that have have already been painted. Nicole Curtis from the Rehab Addict is going to be who most people in your market are going to look to as the design guru for the type of property you are describing.  Look to her to guide your finish choices.

@Collin J Marshall

Your first step should be to connect with a real estate broker who specializes in multi-family properties.  If you are looking at 1-4 units any investor friendly realtor would work.  5 or more units look for a commercial broker.  You should also work on defining exactly what property you are looking for and where you want it to be located.  Do you want Class A properties or B or C?  Are you looking for appreciation or cash flow?  What Cap rate, and/or cash on cash return are you looking for?  What is the comparable cap rate in the area that you are looking?  

Welcome to BP and best of luck in your real estate investing.

Some strategies:

1.  Friends an family loan you the money as a 2nd note secured against the property - this may reduce your chances of getting a first mortgage though so check with your mortgage broker - Offer them a fixed interest rate and a payback of the balance of the note at a specified date in the future.

2.  Split the down payment and expenses, put them on the mortgage and split the proceeds according to the percentage that they paid in.

3.  Give them an equity position in the property that is equal to the percentage of value that they contribute.  I.E. property is valued at $500,000 they contribute $50,000 they get 10% of rent and profit when the property is sold or refinanced.

@Zachary Bellin

If your property truly appraises at $350,000 as it sits you may be able to get another hard money loan for approximately $227,500 but you will have to pay points for the origination fee probably $6,825.  Your options are most like to refi the existing hard money loan with your lender which will not generate cash flow, sell the property, I'd list it at slightly below market value to generate interest, or sell one of your properties to your brother - he can get a hard money loan and you can use the cash to finish them up and service the existing loans.  It sounds like you are over-leveraged though so your first priority should be getting your first flip on the market and sold.

I just got off the phone with a potential investor.  He is a tile guy who does high end kitchen and bath remodels and knows without a doubt that he will be a great real estate investor and that he is going to kill it.  He called to find out how much money my company would loan him on potential deals. I told him if he had some properties that he was looking at I would analyze the deal and give him feedback.

So he sends over two properties - the first he said was $195k with a rehab budget of $100k and ARV of $425,000 or maybe more, the second: Asking price $70,000, $45 - $60,000K of rehab his ARV $250,000 to $275,000.

My numbers on the first property: ARV $280,000 second property: ARV $194,000. After I sent over the numbers he called me back and argued with my numbers. I knew he would, new investors almost always do. I get it, you know that you are going to do a great rehab, you'll be able to crush the competition and it will sell as soon as it hits the market for way more than the competition. But I'd like to tell you why it's not a great idea to argue about value with a lender and Realtor, especially one who is an investor.

1. I have access to information you probably don't have. Texas is a non-disclosure state, only licensed Realtors and other subscribers to the MLS have access to sold data. The sold comps are really the only comps that matter, and the properties that have sold in less than 30 days matter more.

2.  I care a lot about location, I want to be within 1/2 mile preferably 1/4 mile and I'm going to throw out or adjust value on any comps that are in a different subdivision, school district or across a major arterial or railroad track from the house you are interested in.

3.  I only make money when a house sells or a loan closes.  If I am telling you that I am concerned about your numbers I am putting your well being ahead of my own.  I do this because it is the right thing to do and as a professional I am bound by a code of ethics to represent you and your interests and put those interests above my own.  But realize there is absolutely nothing in it for me when I tell you what my numbers are, especially if they are lower than yours.

4.  Finally, analyzing deals is how I make my living.  My employers make their living off of my ability to analyze deals and produce high quality performing loans.  We are not speculators, we lend money based on a proven equation and if we are going to take a gamble on a property it will be one we buy with our own money in our own portfolio. We do not risk money on someone else's project, we don't believe in trust but verify.  We verify period. If the deal is good we will fund it, if not we won't, it is as simple as that. 

5.  Appraisers have access to the same data I have, use almost exactly the same formula that I use and work for conventional lenders whose guidelines are just as stringent as those of my boss.  If the appraiser comes up with a number that is lower than your asking price the lender for your buyer will not loan the full asking amount.  Your buyer will have to either a. come up with the difference, (paying more than a licensed professional says the property is worth), b. refuse to pay more than the appraised price or c. walk away.

As I said earlier, I only make money when I close a loan or a sale - I have no vested interest in telling you that a property is worth less than it actually is. If my numbers are actually lower than the end result you make more money - a win for you. But if my numbers are accurate and you overpay for a property you crash and burn. If you truly disagree with my numbers get another Realtor to run a CMA for you. Make sure you tell them you want sold comps in the last 6 months within .25 miles of the property you are interested in.

PS - My number is not usually the final say, if you want to apply for a loan anyway you can.  We will not charge you anything until you close the loan, however, we will require you to pay for an appraisal which can run between $300 and $1,000 depending on the property and the location.  You will have to pay for that before we loan you the money.   

@Adrian C.

To get funding either bank loans or hard money you will need to be one year out from your bankruptcy.  Wholesaling would be a good strategy to start earning money while working in the real estate field. 

My advice to you would be to spend the next year saving as much money as you can, listen to the Bigger Pockets Money podcast for tips and tricks and then buy your first property as a house hack or a live in flip. There are programs through FHA, Fannie Mae and Freddie Mac that will help you get into a home with as low as 3.5% down, VA and USDA have 0% down programs, and there are down payment assistance programs that will help you bridge the gap between what you have saved and what you need for a down payment.

Your first home should be owner-occupied because you can get in for a much lower interest rate, you will save money on living expenses - especially if you house hack, and if you live there for two years and fix it up while living there when you sell you can keep the profits tax free.  Mindy Jensen from the money podcast still does this as the backbone of her real estate investing strategy.  I did it too and that is how I was able to quit my job at 38, move across the country and start flipping houses full time.

Keep your goals in front of you and don't worry about the bankruptcy, it is meant as a way to help you start over, so look at it as the blessing in disguise that it is.

I would recommend leaving your money for the kids college in the 529 and let it do it's thing.  Then I would concentrate on saving 10 to 20% and purchasing an owner finance deal and putting a renter in place to cover the mortgage. And then in 3 years do it again.  When your fist child reaches 18 sell or refinance the first property and use the proceeds to fund the shortfall in tuition between the 529 and the anticipated college expenses.  Use the remainder to pay off the 2nd property and sell or refinance it to ensure you have enough money for the 2nd child to go to college.  

@Alexi Schreier

You can make money with the BRRRR strategy in San Antonio, there are deals out there but you either have to be wiling to crunch a lot of numbers or work with someone who is willing to do that. I work with investors in the San Antonio and Austin markets as well as being an investor myself.

Strangely the biggest problem with the San Antonio market is the availability of potential deals out there. Currently I'm working a list of over 200 possibly properties in San Antonio crunching the numbers determining the offer price to hit the target returns for my clients and making offers.  Contrast that to the Austin market where I'm lucky if there are 10 properties a day that merit additional scrutiny. Austin is definitely a market where you have to make deals and opportunities happen, San Antonio is more a matter of mining for a great deal.

@Andrew Schmidt

From your post I have to agree with @TJ Jeff, it sounds like your best first move would be a live in flip possibly combined with a house hack. In the Austin area there are down payment programs that can be coupled with FHA loans to get you into an owner occupied home with little or no money down. There are also loans like USDA that have 0 money down and more close in communities than you would think qualify. The other benefit of owner occupancy besides access to lower cost financing is the tax advantage, if you decide to sell in two years you can keep up to $250,000 of profit (if your single, $500,000 if your married) tax free. Also, Texas has the best homestead protection laws in the country so owning your own home is a pivotal first step to financial independence.

Dan Castro is your guy.